Government backs brownfield tax boost

The sixth annual report of the Government Panel on Sustainable Development calls for the harmonisation of value added tax between greenfield and brownfield development to promote the refurbishment of buildings already in use.

At the moment, VAT for new build on greenfield sites is zero rated while refurbishment and development on brownfield sites is subject to VAT at 17.5 per cent.

The report says: "There is a critical need for the use of tax incentives and disincentives to encourage appropriate land use, for example, as proposed in the panel's fourth report, the application of VAT to greenfield sites and refurbishment of derelict houses might be harmonised."

Empty Homes Agency chief executive Ashley Horsey said it was good the panel was reiterating the message in such clear terms.

He told Housing Today: "This continues to add weight to the argument of those involved in housing, planning and sustainable development that this is the way. The only people who do not seemed to be signed up to [VAT harmonisation] are the Treasury."

Horsey added: "Sustainability is much more than pounds shillings and pence."

The DETR is known to be calling on the Treasury to allow reduced rates of VAT, despite the fact that the move was not included in the budget (Housing Today, 6 April).

National Housing Federation policy officer Aaron Cahill said: "Brownfield sites are difficult to assemble and develop, whereas the opposite is generally true for greenfield developments. If the government are serious about hitting their own 60 per cent target [for new homes to be build on previously developed land], year in year out, they need to do something about this anomaly."

The report also says it hopes the impending Urban White Paper encompasses proposals made by Egan's construction task force and that the recommendations made by urban renaissance task force are taken into account in the Rural White Paper.